<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended September 30, 2005

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR  15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.

     For the transition period from __________________to ___________________

                        Commission file number 000-32641

                           JAMES MONROE BANCORP, INC.
             (Exact Name of Registrant as Specified in its Charter)

          VIRGINIA                                     54-1941875
  (State or Other Jurisdiction             (I.R.S. Employer Identification No.)
of Incorporation or Organization)


                  3033 WILSON BLVD., ARLINGTON, VIRGINIA 22201
                    (Address of Principal Executive Offices)

                                  703-707-8855
              (Registrant's Telephone Number, Including Area Code)

                                       N/A
              (Former Name, Former Address and Former Fiscal Year,
                         If Changed Since Last Report)


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X   No ___ .

Indicate by check mark whether the registrant is an accelerated filer as defined
in Rule 12b-2 of the Securities Exchange Act of 1934. Yes ___   No X .

Indicate by check mark whether the registrant is a shell company as defined in
Rule 12b-2 of the Securities Exchange Act. Yes ___.    No X .

The number of shares of the registrant's common stock, $1 par value, as of
October 31, 2005 is 4,458,422.


<PAGE>

                           JAMES MONROE BANCORP, INC.
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                  Page No.

<S>                                                                                               <C>
Part I.    Financial Information

           Item 1.  Financial Statements
                    Consolidated Balance Sheets at September 30, 2005
                         December 31, 2004, and September 30, 2004                                  3
                    Consolidated Statements of Income for the three and nine months ended
                          September 30, 2005 and 2004                                               4
                    Consolidated Statements of Changes in Stockholders'
                         Equity for the nine months ended September 30, 2005 and 2004               5
                    Consolidated Statements of Cash Flows for the nine months
                         ended September 30, 2005 and 2004                                          6
                    Notes to Interim Consolidated Financial Statements                              7

           Item 2.  Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                                            15

           Item 3.  Quantitative and Qualitative Disclosures About Market Risk                     31

           Item 4.  Controls and Procedures                                                        31

Part II.   Other Information

           Item 1.  Legal Proceedings                                                              32

           Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                    32

           Item 3.  Defaults Upon Senior Securities                                                32

           Item 4.  Submission of Matters to a Vote of Security Holders                            32

           Item 5.  Other Information                                                              32

           Item 6.  Exhibits                                                                       32
</TABLE>


                                       2
<PAGE>

                          PART I. Financial Information

Item 1. Financial Statements


                           JAMES MONROE BANCORP, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
         September 30, 2005, December 31, 2004, and September 30, 2004
                    (Dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                      (Unaudited)           (Audited)          (Unaudited)
                                                     SEPTEMBER 30,         DECEMBER 31,       SEPTEMBER 30,
                                                         2005                 2004                2004
                                                   -----------------    -----------------   ------------------
<S>                                                       <C>                  <C>                  <C>
ASSETS
  Cash and due from banks                                 $  16,675            $   9,286            $  14,831
  Interest bearing deposits in banks                            195                2,442                1,668
  Federal funds sold                                              -               35,754               48,275
  Securities available for sale, at fair value              119,416              146,795              118,053
  Loans held for sale                                         3,389                2,987                  549
  Loans:
    Loans, net of unearned income                           362,049              249,996              230,104
    Allowance for loan losses                                (3,766)              (2,790)              (2,577)
                                                   -----------------    -----------------   ------------------
  Loans, net                                                358,283              247,206              227,527
  Bank premises and equipment, net                            2,375                2,438                2,357
  Accrued interest receivable                                 2,613                1,977                1,746
  Other assets                                                2,777                1,885                1,707
                                                   -----------------    -----------------   ------------------

TOTAL ASSETS                                              $ 505,723            $ 450,770            $ 416,713
                                                   =================    =================   ==================

LIABILITIES AND STOCKHOLDERS' EQUITY
  Deposits:
    Noninterest bearing deposits                          $ 114,547             $ 91,857            $ 102,054
    Interest bearing deposits                               308,852              312,197              268,565
                                                   -----------------    -----------------   ------------------
  Total deposits                                            423,399              404,054              370,619
  Federal funds purchased                                    14,974                    -                    -
  Federal Home Loan Bank advances                            18,000                    -                    -
  Trust preferred capital notes                               9,279                9,279                9,279
  Accrued interest payable and other liabilities              1,421                  536                  643
                                                   -----------------    -----------------   ------------------
    Total liabilities                                       467,073              413,869              380,541
                                                   -----------------    -----------------   ------------------

STOCKHOLDERS' EQUITY
  Common stock, $1 par value; authorized
    10,000,000 shares; 4,458,422 issued
    and outstanding at September 30, 2005,
    4,445,224 at December 31, 2004, 4,437,869
    at September 30, 2004                                     4,458                4,445                4,438
  Capital surplus                                            24,469               24,325               24,204
  Retained earnings                                          11,406                8,458                7,633
  Accumulated other comprehensive income (loss)              (1,683)                (327)                (103)
                                                   -----------------    -----------------   ------------------
Total stockholders' equity                                   38,650               36,901               36,172
                                                   -----------------    -----------------   ------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $ 505,723            $ 450,770            $ 416,713
                                                   =================    =================   ==================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       3
<PAGE>

                           JAMES MONROE BANCORP, INC.
                                AND SUBSIDIARIES
                        Consolidated Statements of Income
                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                              (Unaudited)                      (Unaudited)
                                                          THREE MONTHS ENDED                NINE MONTHS ENDED
                                                             SEPTEMBER 30,                    SEPTEMBER 30,
                                                     ------------------------------   ------------------------------
                                                         2005             2004            2005             2004
                                                     -------------    -------------   -------------    -------------
<S>                                                       <C>              <C>            <C>               <C>
INTEREST AND DIVIDEND INCOME:
Loans, including fees                                     $ 5,795          $ 3,318        $ 15,065          $ 9,128
Loans held for sale                                            46                8             104               26
Securities, taxable                                         1,271              988           4,112            2,813
Federal funds sold                                             74              112             208              162
Other interest income                                          28                -              39                -
                                                     -------------    -------------   -------------    -------------
Total interest and dividend income                          7,214            4,426          19,528           12,129
                                                     -------------    -------------   -------------    -------------
INTEREST EXPENSE:
Deposits                                                    2,208            1,120           5,731            2,838
Federal funds purchased                                       140                -             277               36
Borrowed funds                                                160              117             445              327
                                                     -------------    -------------   -------------    -------------
Total interest expense                                      2,508            1,237           6,453            3,201
                                                     -------------    -------------   -------------    -------------
Net interest income                                         4,706            3,189          13,075            8,928
PROVISION FOR LOAN LOSSES                                     234              273           1,013              766
                                                     -------------    -------------   -------------    -------------
Net interest income after provision for loan losses         4,472            2,916          12,062            8,162
                                                     -------------    -------------   -------------    -------------
NONINTEREST INCOME:
Service charges and fees                                       90               72             247              254
Gain (loss) on sale of securities                              (5)               -              13               54
Gain on sale of loans                                         280               77             636              248
Other                                                         144               82             348              265
                                                     -------------    -------------   -------------    -------------
Total noninterest income                                      509              231           1,244              821
                                                     -------------    -------------   -------------    -------------
NONINTEREST EXPENSES:
Salaries and wages                                          1,683              905           4,532            2,721
Employee benefits                                             280              178             807              520
Occupancy expenses                                            305              265             901              593
Equipment expenses                                            166              138             491              304
Other operating expenses                                      708              589           2,093            1,575
                                                     -------------    -------------   -------------    -------------
Total noninterest expenses                                  3,142            2,075           8,824            5,713
                                                     -------------    -------------   -------------    -------------
Income before income taxes                                  1,839            1,072           4,482            3,270
PROVISION FOR INCOME TAXES                                    629              367           1,534            1,125
                                                     -------------    -------------   -------------    -------------
Net income                                                $ 1,210            $ 705         $ 2,948          $ 2,145
                                                     =============    =============   =============    =============

EARNINGS PER SHARE, basic                                  $ 0.27           $ 0.16          $ 0.66           $ 0.48
EARNINGS PER SHARE, diluted                                $ 0.26           $ 0.15          $ 0.63           $ 0.46
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       4
<PAGE>

                           JAMES MONROE BANCORP, INC.
                                AND SUBSIDIARIES
           Consolidated Statements of Changes in Stockholders' Equity
             For the Nine Months Ended September 30, 2005, and 2004
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                   Accumulated
                                                                                      Other                            Total
                                                  Common    Capital    Retained    Comprehensive    Comprehensive    Stockholders'
                                                  Stock     Surplus    Earnings    Income (Loss)        Income          Equity
                                                 --------   -------    --------    -------------    -------------    -------------
<S>                                              <C>        <C>         <C>            <C>             <C>             <C>

Balance January 1, 2004                          $ 2,944    $25,425     $ 5,491        $ 31                            $ 33,891
Comprehensive income:
  Net income                                                              2,145                        $ 2,145            2,145
  Net change in unrealized (loss)
    on available for sale securities, net of
    deferred taxes of $69                                                              (134)              (134)            (134)
                                                                                                       -------
  Total comprehensive income                                                                           $ 2,011
                                                                                                       =======
  Issuance of common stock                             3         71                                                          74
  Effect of stock split                            1,478     (1,478)                                                          -

  Cash paid in lieu of fractional shares                                     (3)                                             (3)
  Exercise of stock options                           13        186                                                         199
                                                 -------     ------     -------     -------                            --------
BALANCE, SEPTEMBER 30, 2004                      $ 4,438    $24,204     $ 7,633     $  (103)                           $ 36,172
                                                 =======    =======     =======     =======                            ========

<CAPTION>
                                                                                   Accumulated
                                                                                      Other                            Total
                                                  Common    Capital    Retained    Comprehensive    Comprehensive    Stockholders'
                                                  Stock     Surplus    Earnings    Income (Loss)        Income          Equity
                                                 --------   -------    --------    -------------    -------------    -------------
<S>                                              <C>        <C>         <C>            <C>             <C>             <C>

Balance January 1, 2005                           $4,445    $24,325      $8,458      $ (327)                           $ 36,901
Comprehensive income:
  Net income                                                              2,948                        $ 2,948            2,948
  Net change in unrealized (loss)
    on available for sale  securities, net of
    deferred taxes of $698                                                           (1,356)            (1,356)          (1,356)
                                                                                                      --------
  Total comprehensive income                                                                           $ 1,592
                                                                                                       =======
  Issuance of common stock                             5        103                                                         108
  Exercise of stock options                            8         41                                                          49
                                                 -------     ------     -------     -------                            --------
BALANCE, SEPTEMBER 30, 2005                       $4,458    $24,469    $ 11,406    $ (1,683)                           $ 38,650
                                                 =======    =======     =======     =======                            ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       5
<PAGE>

                           JAMES MONROE BANCORP, INC.
                                AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
              For the Nine Months Ended September 30, 2005 and 2004
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          NINE MONTHS ENDED SEPTEMBER 30,
                                                                                          -------------------------------
                                                                                            2005                 2004
                                                                                          --------             ---------
<S>                                                                                       <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                                $  2,948             $   2,145
Adjustments to reconcile net income to net cash provided by operating activities
  Depreciation and amortization                                                                447                   257
  Provision for loan losses                                                                  1,013                   766
  Amortization of bond premium                                                                 195                   243
  Accretion of bond discount                                                                  (181)                  (62)
  Realized (gain) on sales of securities available for sale                                    (13)                  (54)
  Realized (gain) on sales of loans held-for-sale                                             (636)                 (248)
  Origination of loans held-for-sale                                                       (43,116)              (12,724)
  Proceeds from sales of loans held-for-sale                                                43,350                12,984
  Deferred income tax (benefit)                                                               (317)                 (340)
  (Increase) in accrued interest receivable                                                   (636)                 (410)
  (Increase) decrease in other assets                                                          123                   (53)
  Increase (decrease) in accrued interest payable and other liabilities                        885                  (115)
                                                                                          --------             ---------
    Net cash provided by operating activities                                                4,062                 2,389
                                                                                          --------             ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of securities available for sale                                                (3,178)              (50,349)
  Proceeds from calls and maturities of securities available for sale                       14,644                18,197
  Proceeds from sales of securities available for sale                                      13,858                36,169
  Purchases of premises and equipment                                                         (384)               (1,226)
  (Increase) decrease in interest bearing cash balances                                      2,247                (1,668)
  (Increase) decrease in Federal funds sold                                                 35,754               (48,275)
  Net (increase) in loans                                                                 (112,090)              (61,201)
                                                                                          --------             ---------
    Net cash (used in) investing activities                                                (49,149)             (108,353)
                                                                                          --------             ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase (decrease) in demand deposits, savings deposits
    and money market accounts                                                              (28,004)              109,905
  Net increase in time deposits                                                             47,349                 5,598
  Net increase (decrease) in Federal funds purchased                                        14,974                (6,886)
  Net increase in Federal Home Loan Bank advances                                           18,000                     -
  Proceeds from issuance of common stock                                                       157                   273
  Cash paid in lieu of fractional shares                                                         -                    (3)
                                                                                          --------             ---------
    Net cash provided by financing activities                                               52,476               108,887
                                                                                          --------             ---------

Increase in cash and due from banks                                                       $  7,389             $   2,923
CASH AND DUE FROM BANKS
  Beginning                                                                               $  9,286             $  11,908
                                                                                          --------             ---------
  Ending                                                                                  $ 16,675             $  14,831
                                                                                          ========             =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Interest paid on deposits and borrowed funds                                            $  6,185             $   3,383
                                                                                          ========             =========
  Income taxes paid                                                                       $  1,627             $   1,218
                                                                                          ========             =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES,
  unrealized (loss) on securities available for sale                                      $ (2,054)            $    (203)
                                                                                          ========             =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       6
<PAGE>

                   JAMES MONROE BANCORP, INC. AND SUBSIDIARIES
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1.

Organization. James Monroe Bancorp, Inc. was incorporated under the laws of the
Commonwealth of Virginia on April 9, 1999 to be the holding company for James
Monroe Bank. James Monroe Bancorp acquired all of the shares of James Monroe
Bank on July 1, 1999 in a mandatory share exchange under which each outstanding
share of common stock of James Monroe Bank was exchanged for one share of James
Monroe Bancorp common stock. James Monroe Bank, a Virginia chartered commercial
bank, which is a member of the Federal Reserve System, is James Monroe Bancorp's
sole operating subsidiary. James Monroe Bank commenced banking operations on
June 8, 1998. As of September 30, 2005 the Company operated the main office in
Arlington, Virginia, one branch in Annandale, Virginia, one branch and a
drive-up facility in Leesburg, Virginia, one branch in Fairfax City, Virginia,
one branch in Chantilly, Virginia, one branch in Manassas, Virginia, and one
loan production office in Gaithersburg, Maryland.

Basis of Presentation. In the opinion of management, the accompanying unaudited
consolidated financial statements of James Monroe Bancorp, Inc. and Subsidiaries
(the Company) have been prepared in accordance with U.S. generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q. Accordingly, they do not include all the information
and footnotes required for complete financial statements. In the opinion of
management, all adjustments and reclassifications necessary for a fair
presentation have been included. All such adjustments and reclassifications are
of a normal and recurring nature. Operating results for the nine month period
ended September 30, 2005 are not necessarily indicative of the results that may
be expected for the year ended December 31, 2005, or any other period. The
unaudited interim consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and footnotes for
the year ended December 31, 2004.

Stock Compensation Plans. At September 30, 2005, the Company had three stock
based compensation plans. The Company accounts for these plans under the
recognition and measurement principles of APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations. No stock based employee
compensation cost is reflected in net income, as all options granted under those
plans had an exercise price equal to the market value of the underlying common
stock on the date of the grant. The following table illustrates the effect on
net income and earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123, Accounting for Stock Based Compensation,
to stock based employee compensation.

Effective April 13, 2005, the Board of Directors of the Company approved the
acceleration of the vesting of all "underwater" unvested stock options including
options held by executive officers. A stock option was considered "underwater"
if the option exercise price was greater than $18.05 per share, the opening
market price as of the date of the board action. In addition, the Board of
Directors of the Company approved the granting and immediate vesting of 11,250
shares of the Company's stock to an Executive Officer of the Company. Under the
Executive Officer's employment agreement with the Company these shares were
originally scheduled to be granted in the fourth quarter of 2005. As a result of
these actions, the vesting of options to purchase 66,500 shares of the Company's
common stock was accelerated.


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED                         NINE MONTHS ENDED
                                                                SEPTEMBER 30,                             SEPTEMBER 30,
                                                    -------------------------------------     -------------------------------------
                                                         2005                 2004                  2005                2004
                                                    ----------------    -----------------     -----------------   -----------------
<S>                                                         <C>                    <C>                 <C>                 <C>
(Dollars in thousands, except per share data)

Net income, as reported                                     $ 1,210                $ 705               $ 2,948             $ 2,145
Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards                                          (201)                (114)                 (965)               (556)
                                                    ----------------    -----------------     -----------------   -----------------
Pro forma net income                                        $ 1,009                $ 591               $ 1,983             $ 1,589
                                                    ================    =================     =================   =================

Earnings per share:
     Basic- as reported                                        0.27                 0.16                  0.66                0.48
                                                    ================    =================     =================   =================
     Basic- pro forma                                          0.23                 0.13                  0.45                0.36
                                                    ================    =================     =================   =================
     Diluted- as reported                                      0.26                 0.15                  0.63                0.46
                                                    ================    =================     =================   =================
     Diluted- pro forma                                        0.21                 0.13                  0.42                0.34
                                                    ================    =================     =================   =================
</TABLE>

NOTE 2.  EARNINGS PER SHARE

The following table discloses the calculation of basic and diluted earnings per
share for the three months and nine months ended September 30, 2005 and 2004.
The average shares outstanding and per share calculations have been restated to
reflect the 3-for-2 stock split discussed in Note 7 and all preceding stock
splits.


<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                                   SEPTEMBER 30,                        SEPTEMBER 30,
                                                      ------------------------------------  ------------------------------------
                                                           2005                2004              2005                 2004
                                                      ----------------    ----------------  ----------------     ---------------
<S>                                                           <C>               <C>               <C>                 <C>
(Dollars in thousands, except per share data)

Net Income                                                    $ 1,210               $ 705           $ 2,948             $ 2,145
                                                      ================    ================  ================     ===============

Weighted average shares outstanding--basic                  4,451,945           4,437,527         4,448,526           4,434,214
Common share equivalents for stock options                    282,754             240,809           256,463             238,316
                                                      ----------------    ----------------  ----------------     ---------------
Weighted average shares outstanding--diluted                4,734,699           4,678,336         4,704,989           4,672,530
                                                      ================    ================  ================     ===============

Earnings per share-basic                                       $ 0.27              $ 0.16            $ 0.66              $ 0.48
                                                      ================    ================  ================     ===============
Earnings per share-diluted                                     $ 0.26              $ 0.15            $ 0.63              $ 0.46
                                                      ================    ================  ================     ===============
</TABLE>


                                       8
<PAGE>

NOTE 3.  SECURITIES AVAILABLE FOR SALE

Securities available for sale are reported at fair value with unrealized gains
and losses (net of income taxes) recorded in stockholders' equity as a component
of "accumulated other comprehensive income (loss)." Actual gains and losses on
the sales of these securities, if any, are computed using the specific
identification method and included in "gain (loss) on sale of securities" on the
income statement. The amortized cost and carrying value (estimated market value)
of securities available for sale at September 30, 2005, December 31, 2004, and
September 30, 2004, are summarized in the tables that follow. The Company
classifies all securities as available for sale.


<TABLE>
<CAPTION>
                                                          SEPTEMBER 30, 2005
                                   ----------------------------------------------------------------
                                                        GROSS           GROSS          ESTIMATED
                                     AMORTIZED       UNREALIZED       UNREALIZED        MARKET
(Dollars in thousands)                  COST            GAINS           LOSSES           VALUE
                                   --------------  ---------------  --------------  ---------------
<S>                                     <C>                  <C>         <C>              <C>
U.S. agency                             $ 97,645              $ -        $ (1,908)        $ 95,737
Mortgage-backed securities                19,752               33            (481)          19,304
Corporate notes                            1,853                -            (194)           1,659
Restricted stock                           2,716                -               -            2,716
                                   --------------  ---------------  --------------  ---------------
Total securities                       $ 121,966             $ 33        $ (2,583)       $ 119,416
                                   ==============  ===============  ==============  ===============

<CAPTION>
                                                           DECEMBER 31, 2004
                                   ----------------------------------------------------------------
                                                        GROSS           GROSS          ESTIMATED
                                     AMORTIZED       UNREALIZED       UNREALIZED        MARKET
(Dollars in thousands)                  COST            GAINS           LOSSES           VALUE
                                   --------------  ---------------  --------------  ---------------
<S>                                    <C>                  <C>            <C>           <C>
U.S. agency                            $ 121,594            $ 229          $ (686)       $ 121,137
Mortgage-backed securities                22,208              172            (208)          22,172
Corporate notes                            2,151               26             (29)           2,148
Restricted stock                           1,338                -               -            1,338
                                   --------------  ---------------  --------------  ---------------
Total securities                       $ 147,291            $ 427          $ (923)       $ 146,795
                                   ==============  ===============  ==============  ===============

<CAPTION>
                                                           SEPTEMBER 30, 2004
                                   ----------------------------------------------------------------
                                                        GROSS           GROSS          ESTIMATED
                                     AMORTIZED       UNREALIZED       UNREALIZED        MARKET
(Dollars in thousands)                  COST            GAINS           LOSSES           VALUE
                                   --------------  ---------------  --------------  ---------------
<S>                                     <C>                 <C>            <C>            <C>
U.S. agency                             $ 97,718            $ 356          $ (503)        $ 97,571
Mortgage-backed securities                17,289              165            (197)          17,257
Corporate notes                            2,154               45             (22)           2,177
Restricted Stock                           1,048                -               -            1,048
                                   --------------  ---------------  --------------  ---------------
Total securities                       $ 118,209            $ 566          $ (722)       $ 118,053
                                   ==============  ===============  ==============  ===============
</TABLE>


                                       9
<PAGE>

Information pertaining to securities with gross unrealized losses at September
30, 2005 and December 31, 2004, aggregated by investment category and length of
time that the individual securities have been in a continuous loss position,
follows:


<TABLE>
<CAPTION>
                                                SEPTEMBER 30, 2005
                            --------------------------------------------------------
                               LESS THAN 12 MONTHS           12 MONTHS OR MORE
                            ---------------------------  ---------------------------
                                           UNREALIZED                   UNREALIZED
(Dollars in thousands)       FAIR VALUE      (LOSS)      FAIR VALUE       (LOSS)
                            -------------  ------------  ------------  -------------
<S>                             <C>           <C>           <C>            <C>
U.S. Government and
federal agency                  $ 68,619      $ (1,032)     $ 27,118       $   (876)
Mortgage backed                   11,953          (322)        5,115           (159)
Corporate notes                      728           (84)          931           (110)
                            -------------  ------------  ------------  -------------
Total                           $ 81,300      $ (1,438)     $ 33,164       $ (1,145)
                            =============  ============  ============  =============

<CAPTION>
                                                DECEMBER 31, 2004
                            --------------------------------------------------------
                               LESS THAN 12 MONTHS           12 MONTHS OR MORE
                            ---------------------------  ---------------------------
                                           UNREALIZED                   UNREALIZED
(Dollars in thousands)       FAIR VALUE      (LOSS)      FAIR VALUE       (LOSS)
                            -------------  ------------  ------------  -------------
<S>                             <C>           <C>           <C>            <C>
U.S. Government and
federal agency                  $ 53,745        $ (336)     $ 11,192         $ (350)
Mortgage backed                    7,505          (109)        3,556            (99)
Corporate notes                    1,020           (29)            -              -
                            -------------  ------------  ------------  -------------
Total                           $ 62,270        $ (474)     $ 14,748         $ (449)
                            =============  ============  ============  =============
</TABLE>

Management evaluates securities for other-than-temporary impairment at least on
a quarterly basis, and more frequently when economic or market concerns warrant
such evaluation. Consideration is given to (1) the length of time and the extent
to which the fair value has been less than cost, (2) the financial condition and
near-term prospects of the issuer, and (3) the intent and ability of the Company
to retain its investment in the issuer for a period of time sufficient to allow
for any anticipated recovery in fair value.

The bonds in an unrealized loss position at September 30, 2005 and December 31,
2004 were temporarily impaired due to the current interest rate environment and
not increased credit risk. All securities owned by the Company are payable at
par at maturity. Of the securities temporarily impaired at September 30, 2005,
26 are U.S. Government agency issued bonds (Government National Mortgage
Association and the Federal Home Loan Bank) rated AAA by Standard and Poor's, 38
are government sponsored enterprise issued bonds (Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation) rated AAA by Standard
and Poor's, and two are corporate bonds rated investment grade by Standard and
Poor's. As management has the ability and intends to hold debt securities until
maturity, or for the foreseeable future, no declines are deemed to be other than
temporary.


                                       10
<PAGE>

NOTE 4.  LOANS

Major classifications of loans at September 30, 2005, December 31, 2004, and
September 30, 2004 are summarized in the following table.


<TABLE>
<CAPTION>
                                                   SEPTEMBER 30,       DECEMBER 31,       SEPTEMBER 30,
(Dollars in thousands)                                  2005               2004               2004
                                                  -----------------  -----------------  ------------------
<S>                                                       <C>                <C>                 <C>
Construction loans                                        $ 42,220           $ 35,166            $ 30,163
Commercial loans                                            39,792             32,782              32,519
Commercial real estate loans                               260,517            167,696             154,286
Real estate 1-4 family residential                           1,358              1,559               1,607
Home equity loans                                            8,190              5,400               5,242
Consumer loans                                               9,664              7,290               6,230
Deposit overdrafts                                             308                103                  57
                                                  -----------------  -----------------  ------------------
Total loans                                                362,049            249,996             230,104
Less: allowance for loan losses                             (3,766)            (2,790)             (2,577)
                                                  -----------------  -----------------  ------------------
Net Loans                                                $ 358,283          $ 247,206           $ 227,527
                                                  =================  =================  ==================
</TABLE>

Changes in the allowance for loan losses are as follows:


<TABLE>
<CAPTION>
                                                  NINE MONTHS ENDED        YEAR ENDED        NINE MONTHS ENDED
                                                    SEPTEMBER 30,         DECEMBER 31,         SEPTEMBER 30,
(Dollars in thousands)                                   2005                 2004                  2004
                                                  -------------------  -------------------   -------------------
<S>                                                     <C>                 <C>                   <C>
Beginning balance                                       $ 2,790             $ 1,955               $ 1,955
Loan charge-offs:
  Commercial                                                (36)               (135)                 (135)
  Consumer                                                   (1)                (21)                  (10)
                                                  --------------  ------------------   -------------------
    Total charge-offs                                       (37)               (156)                 (145)
Recoveries of loans previously charged-off:
  Commercial                                                  -                   -                     -
  Consumer                                                    -                   1                     1
                                                  --------------  ------------------   -------------------
    Total recoveries                                          -                   1                     1
                                                  --------------  ------------------   -------------------
  Net charge-offs                                           (37)               (155)                 (144)
                                                  --------------  ------------------   -------------------
Provision for loan losses                                 1,013                 990                   766
                                                  --------------  ------------------   -------------------
Ending balance                                          $ 3,766             $ 2,790               $ 2,577
                                                  ==============  ==================   ===================
</TABLE>


                                       11
<PAGE>

         The following table presents the amounts of nonperforming assets at the
dates indicated.

<TABLE>
<CAPTION>
                                               SEPTEMBER 30,         DECEMBER 31,        SEPTEMBER 30,
(Dollars in thousands)                             2005                 2004                 2004
                                             -----------------    -----------------    -----------------
<S>                                                     <C>                  <C>                  <C>
Nonaccrual loans
  Commercial                                            $ 225                $ 349                $ 354
  Consumer                                                  -                    -                    -
                                             -----------------    -----------------    -----------------
    Total nonaccrual loans                                225                  349                  354
Loans past-due 90-days or more
  Commercial                                               22                    -                   40
  Consumer                                                 96                    -                    7
                                             -----------------    -----------------    -----------------
    Total loans past-due 90-days or more                  118                    -                   47
Restructured loans                                          -                    -                    -
                                             -----------------    -----------------    -----------------
    Total nonperforming assets                          $ 343                $ 349                $ 401
                                             =================    =================    =================
</TABLE>

NOTE 5.  DEPOSITS

Interest bearing deposits consist of the following:

<TABLE>
<CAPTION>
                                                        SEPTEMBER 30,      DECEMBER 31,      SEPTEMBER 30,
(Dollars in thousands)                                      2005               2004              2004
                                                       ----------------   ----------------  ----------------
<S>                                                          <C>                <C>               <C>
NOW accounts                                                 $  18,126          $  14,389         $  14,209
Savings accounts                                                 3,189              4,361             4,421
Money market accounts                                          167,056            220,315           195,824
Certificates of deposit under $100,000                          13,710             12,210            11,637
Certificates of deposit $100,000 and over                      104,794             59,310            40,991
Individual retirement accounts                                   1,977              1,612             1,483
                                                       ----------------   ----------------  ----------------
Total interest bearing deposits                              $ 308,852          $ 312,197         $ 268,565
                                                       ================   ================  ================
</TABLE>

NOTE 6.  TRUST PREFERRED CAPITAL SECURITIES

On March 25, 2002, James Monroe Statutory Trust I, a subsidiary of the Company,
was formed for the purpose of issuing redeemable trust preferred securities and
purchasing the Company's junior subordinated debentures, which are its sole
assets. The Company owns all of Trust I's outstanding common securities. On
March 26, 2002, $5 million of the trust preferred securities were issued in a
pooled underwriting totaling approximately $500 million. The securities bear
interest at a rate equal to the three month LIBOR plus 360 basis points, subject
to a cap of 11% which is set and payable on a quarterly basis. During 2004, the
interest rates ranged from 4.71% to 5.55%. The rate for the quarterly period
beginning June 26, 2005 was 7.07%. The rate for the quarterly period beginning
September 26, 2005 is 7.56%. The securities have a maturity date of March 25,
2032, and are subject to varying call provisions beginning March 26, 2007.

On July 16, 2003, James Monroe Statutory Trust II, a subsidiary of the Company,
was formed for the purpose of issuing redeemable trust preferred securities and
purchasing the Company's junior subordinated debentures, which are its sole
assets. The Company owns all of Trust II's outstanding common securities. On
July 31, 2003, $4 million of the trust preferred securities were issued in a
private placement transaction. The securities bear interest at a rate equal to
the three month LIBOR plus 310 basis points, subject to a cap of 12% which is
set and payable on a quarterly basis. During 2004, the interest rates ranged
from 4.20% to 5.08%. The rate for the quarterly period beginning June 30, 2005
was 6.59%. The rate for the quarterly period beginning September 30, 2005 is
7.06%. The securities have a maturity date of July 31, 2033, and are subject to
ranging call provisions beginning July 31, 2008.


                                       12
<PAGE>

The trust preferred securities may be included in Tier 1 capital for regulatory
capital adequacy determination purposes up to 25% of Tier 1 capital. The portion
of the securities not considered as Tier 1 capital will be included in Tier 2
capital. At June 30, 2005, all of the trust preferred securities qualified as
Tier 1 capital.

The Company and the Trusts believe that, taken together, the Company's
obligations under the junior subordinated debentures, the Indentures, the Trust
Declarations and the Guarantees entered into in connection with the issuance of
the trust preferred securities constitute a full and unconditional guarantee by
the Company of the Trusts' respective obligations with respect to the trust
preferred securities.

Subject to certain exceptions and limitations, the Company may elect from time
to time to defer interest payments on the junior subordinated debt securities,
which would result in a deferral of distribution payments on the related trust
preferred securities.

NOTE 7.  RECENT ACCOUNTING PRONOUNCEMENTS

In May 2005, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 154, "Accounting Changes and Error
Corrections - A Replacement of APB Opinion No. 20 and FASB Statement No. 3." The
new standard changes the requirements for the accounting for and reporting of a
change in accounting principle. Among other changes, SFAS No. 154 requires that
a voluntary change in accounting principle be applied retrospectively with all
prior period financial statements presented based on the new accounting
principle, unless it is impracticable to do so. SFAS No. 154 also provides that
(1) a change in method of depreciating or amortizing a long-lived nonfinancial
asset be accounted for as a change in estimate (prospectively) that was effected
by a change in accounting principle, and (2) correction of errors in previously
issued financial statements should be termed a "restatement." The new standard
is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. The Company does not anticipate this
revision will have a material effect on its financial statements.

On December 16, 2004, the Financial Accounting Standards Board issued Statement
No. 123R (revised 2004), "Share-Based Payment," (FAS 123R) that addresses the
accounting for share-based payment transactions in which a company receives
employee services in exchange for either equity instruments of the company or
liabilities that are based on the fair value of the company's equity instruments
or that may be settled by the issuance of such equity instruments. FAS 123R
eliminates the ability to account for share-based compensation transactions
using the intrinsic method and requires that such transactions be accounted for
using a fair-value-based method and recognized as expense in the consolidated
statement of income. The effective date of FAS 123R (as amended by the SEC) is
for annual periods beginning after June 15, 2005. The provisions of FAS 123R do
not have a material impact on the Company's results of operations at the present
time.

In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107). SAB
107 expresses the views of the SEC staff regarding the interaction of FAS 123R
and certain SEC rules and regulations and provides the SEC staff's view
regarding the valuation of share-based payment arrangements for public
companies. SAB 107 does not impact the Company's results of operations at the
present time.

In November 2004, the Emerging Issues Task Force (EITF) published Issue 03-1,
"The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments." The Task Force discussed the meaning of other-than-temporary
impairment and its application to certain investments carried at cost. The Task
Force requested that the FASB staff consider other impairment models within U.S.
Generally Accepted Accounting Principles (GAAP) when developing its views. The
Task Force also requested that the scope of the impairment issue be expanded to
include equity investments and investments subject to SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," and that the issue be
addressed by the Task Force as a separate EITF issue. At the EITF meeting, the
Task Force reached a consensus on one issue that certain quantitative and
qualitative disclosures should be required for securities accounted for under
SFAS No. 115 that are impaired at the balance sheet date but for which an
other-than-temporary impairment has not been recognized. The Board ratified the
consensus on that one issue at its November 25, 2004 meeting. In September 2004,
FASB directed its staff to issue two proposed FASB Staff Positions (FSP):
Proposed FSP EITF Issue 03-1-a, which provides guidance for the application of
paragraph 16 of EITF Issue 03-1 to debt securities that are impaired because of
interest rate and/or sector spread increases, and Proposed FSP EITF Issue
03-1-b, which delays the effective date of Issue 03-1 for debt securities that
are impaired because of interest rate and/or sector spread increases. In June
2005, the FASB reach a decision whereby they declined to provide additional
guidance on the meaning of other-than-temporary impairment. The Board directed
the FASB staff to issue EITF 03-1a as final and to draft a new FSP that will
replace EITF 03-01. The final FSP (retitled FAS 115-1, "The Meaning of
Other-Than-Temporary Impairment and it Application to Certain Investments")
would be effective for other-than-temporary impairment analysis conducted in
periods beginning after September 15, 2005. The Company does not anticipate this
revision will have a material effect on its financial statements.


                                       13
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

FORWARD LOOKING STATEMENTS

         This Management's Discussion and Analysis and other portions of this
report contain forward looking statements within the meaning of the Securities
Exchange Act of 1934, as amended, including statements of goals, intentions, and
expectations as to future trends, plans, events or results of Company operations
and policies and regarding general economic conditions. In some cases, forward
looking statements can be identified by use of such words as "may," "will,"
"anticipate," "believes," "expects," "plans," "estimates," "potential,"
"continue," "should," and similar words or phases. These statements are based
upon current and anticipated economic conditions, nationally and in the
Company's market, interest rates and interest rate policies, competitive
factors, government agencies and other third parties, which by their nature are
not susceptible to accurate forecast, and are subject to significant
uncertainty. Because of these uncertainties and the assumptions on which this
discussion and the forward looking statements are based, actual future
operations and results in the future may differ materially from those indicated
herein. Readers are cautioned against placing undue reliance on any such forward
looking statement.

INTRODUCTION

         This Management's Discussion and Analysis reviews the financial
condition and results of operations of the Company and its subsidiaries as of
and for the nine months ended September 30, 2005 and 2004. Some tables cover
more than these periods to comply with Securities and Exchange Commission
disclosure requirements or to illustrate trends over a period of time. When
reading this discussion, reference should be made to the consolidated financial
statements and related notes that appear herein and to our consolidated
financial statements and footnotes thereto for the year ended December 31, 2004.

CRITICAL ACCOUNTING POLICIES

         There were no changes to the Company's critical accounting policies in
the third quarter of 2005. Critical accounting policies are those applications
of accounting principles or practices that require considerable judgment,
estimation, or sensitivity analysis by management. In the financial service
industry, examples, albeit not an all inclusive list, of disclosures that may
fall within this definition are the determination of the adequacy of the
allowance for loan losses, valuation of mortgage servicing rights, valuation of
derivatives or securities without a readily determinable market value, and the
valuation of the fair value of intangibles and goodwill. Except for the
determination of the adequacy of the allowance for loan losses, the Company does
not believe there are other practices or policies that require significant
sensitivity analysis, judgments, or estimations.

         Allowance for Loan Losses. The Company has developed a methodology to
determine, on a quarterly basis, an allowance to absorb probable loan losses
inherent in the portfolio based on evaluations of the collectibility of loans,
historical loss experience, peer bank loss experience, delinquency trends,
economic conditions, portfolio composition, and specific loss estimates for
loans considered substandard or doubtful. All commercial and commercial real
estate loans that exhibit probable or observed credit weaknesses are subject to
individual review. If necessary, reserves would be allocated to individual loans
based on management's estimate of the borrower's ability to repay the loan given
the availability of collateral and other sources of cash flow. Any reserves for
impaired loans are measured based on the present rate or fair value of the
underlying collateral. The Company evaluates the collectibility of both
principal and interest when assessing the need for a loss accrual. A composite
allowance factor that considers the Company's and other peer bank loss
experience ratios, delinquency trends, economic conditions, and portfolio
composition are applied to the total of commercial and commercial real estate
loans not specifically evaluated.

         Homogeneous loans, such as consumer installment, residential mortgage
loans, home equity loans, and smaller consumer loans are not individually risk
graded. Reserves are established for each homogeneous pool of loans based on the
expected net charge offs from a current trend in delinquencies, losses or
historical experience and general economic conditions. The Company has no
material delinquencies in these types of loans, and has not, since inception,
had a trend or an indication of a trend that would guide the Company in expected
material losses in these types of homogeneous pools of loans.

         The Company's allowance for loan losses is determined based upon a
methodology developed by management as described above and is approved by the
board of directors each quarter.


                                       14
<PAGE>

COMPANY HIGHLIGHTS SINCE DECEMBER 31, 2004 ARE:

         o  Assets grew $55.0 million (12%).
         o  Loans grew $112 million (45%).
         o  Deposits grew $19 million (5%).
         o  Net interest margin was 3.80% for the first nine months of 2005
            compared to 3.72% for the full year 2004 and 3.78% during the first
            nine months of 2004.
         o  Asset quality remained strong as the dollar volume of total
            nonperforming loans at September 30, 2005 declined $6,000, from
            $349,000 at December 31, 2004 to $343,000 at September 30, 2005.
            More importantly, the percentage of total loans represented by such
            nonperforming loans has declined significantly from 0.14% at
            December 31, 2004 to 0.09% at September 30, 2005. The allowance for
            loan losses totaled 1.04% of total loans outstanding at September
            30, 2005.
         o  The Company ended the quarter with adequate capital to support
            further growth.
         o  Initiatives undertaken during 2004 including the Company's expansion
            into the Chantilly and Manassas markets, and the opening of a new
            operations center, were growth oriented initiatives taken after
            additional capital was raised in the fourth quarter of 2003. While
            these pro-active initiatives have increased operating expenses, as
            evidenced by the rise in the Bank's efficiency ratio to 60% for the
            third quarter of 2005, the Company's focus remains on a long term
            strategy of expanding our franchise throughout the Northern Virginia
            market.

FINANCIAL OVERVIEW

         The following discussion provides information about the results of
operations and financial condition, liquidity, and capital resources of the
Company and should be read in conjunction with our consolidated financial
statements and notes thereto for the year ended December 31, 2004.

BALANCE SHEET

         September 30, 2005 vs. December 31, 2004 and September 30, 2004. Total
assets increased to $505.7 million at September 30, 2005, an increase of $55.0
million from December 31, 2004, and an increase of $89.0 million from September
30, 2004. The increase in assets since September 30, 2004 was funded by the
Company's growth in deposits and short term borrowings. Since September 30,
2004, deposits increased $52.8 million, with noninterest bearing deposits
increasing $12.5 million, and interest bearing deposits increasing $40.3
million. Short term borrowings totaled $33.0 million at quarter-end. Through the
growth in deposits and short term borrowings, combined with a reallocation of
federal funds sold to higher yielding assets, the Company was able to fund
$131.9 million increase in loans. Securities increased $1.4 million and
overnight investments decreased $48.3 million. Net loans increased $112.1
million from December 31, 2004 funded by deposit growth of $19.3 million,
borrowings of $33.0 million, and a decline in securities and funds sold of $63.1
million.

RESULTS OF OPERATIONS

         Nine Months 2005 vs. Nine Months 2004. For the nine months ended
September 30, 2005, the Company had net income of $2,948,000, or $.63 per
diluted share, compared to $2,145,000 or $.46 per diluted share, for the
comparable period of 2004. Annualized return on average assets was .82% for the
nine months ended September 30, 2005, compared to .85% for the same nine month
period in 2004. Return on average equity was 10.40% for the nine months ended
September 30, 2005, compared with 8.14% for the same nine month period in 2004.

         Third Quarter 2005 vs. Third Quarter 2004. For the quarter ended
September 30, 2005, the Company had net income of $1,210,000, or $.26 per
diluted share, compared to $705,000 or $.15 per diluted share, for the
comparable period of 2004. Annualized return on average assets was .95% for the
three months ended September 30, 2005, compared to .76% for the same three month
period in 2004. Return on average equity was 12.36% for the nine months ended
September 30, 2005, compared with 7.89% for the same nine month period in 2004.


                                       15
<PAGE>

         During the third quarter of 2005, the Company continued to focus on
managing its net interest margin, especially in light of the low, but rising,
interest rate environment. Beginning in 2001 through June 2003, the Federal
Reserve reduced the federal funds target rate an aggregate of 550 basis points.
These dramatic reductions over a relatively short period continued to impact the
loan and investment portfolios in 2003 and 2004, as loans repriced on a delayed
basis or renewed at lower interest rates, and as investment securities matured
or were called, and were reinvested at lower rates. This was partially offset by
continued repricing upon renewal of certificates of deposit. While the Federal
Reserve began to reverse the rate reductions, through a series of eleven
increases aggregating 275 basis points, beginning on June 30, 2004 through
September 30, 2005, the rate reductions and continuing low rate environment have
caused a reduction in the net interest margin throughout the period, from 5.09%
in 2000 to 4.56% in 2001 to 3.90% in 2002 to 3.73% in 2003 to 3.72% in 2004.
Despite these reductions, the Company's practice of managing its interest rate
risk process has mitigated the negative effect of such a severely declining and
low rate environment. As the rate increases have begun to impact the Company,
the net interest margin improved slightly in the first nine months of 2005
compared to the same period in 2004, increasing to 3.80%. The Company expects
that continued increases in the federal funds target rate will contribute to
increased margin as earning assets reprice, while repricing of deposits lags.
However, as discussed further under "Liquidity and Interest Rate Sensitivity
Management," as a result of competitive factors, market conditions, customer
preferences and other factors, the Company may not be able to benefit from
further increases in market interest rates.

         Although the Company has continued to grow in asset size since its
inception in 1998, it has been able to control its operating efficiency. Within
the past year the Company expanded into the Chantilly and Manassas markets and
opened a new operations center. These are growth oriented initiatives taken
after additional capital was raised in the fourth quarter of 2003. While these
pro-active initiatives have increased operating expenses, as evidenced by the
rise in the Bank's efficiency ratio to 60.25% for the third quarter of 2005, the
Company's focus remains on a long term strategy of expanding our franchise
throughout the Northern Virginia market. The efficiency ratio is a non-GAAP
financial measure, which we believe provides investors with important
information regarding our operational efficiency. We compute our efficiency
ratio by dividing noninterest expense by the sum of net interest income on a tax
equivalent basis and noninterest income, which includes securities gains or
losses and gains or losses on the sale of mortgage loans. Comparison of our
efficiency ratio with those of other companies may not be possible, because
other companies may calculate the efficiency ratio differently.


                                       16
<PAGE>

QUARTERLY RESULTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                    2005                                    2004
                                               -------------------------------------------       --------------------------
                                                 THIRD            SECOND           FIRST           FOURTH           THIRD
(Dollars in thousands except share data)        QUARTER           QUARTER         QUARTER          QUARTER         QUARTER
                                               ----------       ----------      ----------       ----------      ----------
<S>                                            <C>              <C>             <C>              <C>             <C>
RESULTS OF OPERATIONS:
Net interest income                            $    4,706       $    4,345      $    4,024       $    3,701      $    3,189
Provision for loan losses                             234              345             434              224             273
Other income                                          509              403             332              354             232
Noninterest expense                                 3,142            2,929           2,753            2,574           2,075
Income before taxes                                 1,839            1,474           1,169            1,257           1,072
Net income                                          1,210              970             768              825             705

PER SHARE DATA:
Earnings per share, basic                      $     0.27       $     0.22      $     0.17       $     0.19      $     0.16
Earnings per share, diluted                    $     0.26       $     0.21      $     0.16       $     0.18      $     0.15
Weighted average shares
          outstanding - basic                   4,451,945        4,448,363       4,445,269        4,440,940       4,437,527
                      - diluted                 4,734,699        4,687,227       4,693,041        4,683,093       4,678,247

AT PERIOD END:
Loans                                          $  362,049       $  333,603      $  291,600       $  249,996      $  230,104
Earning assets                                    485,049          511,102         439,697          437,974         398,649
Total assets                                      505,723          534,261         464,627          450,770         416,434
Deposits                                          423,399          485,455         417,749          404,054         370,619
Stockholders' equity                               38,650           38,385          36,253           36,901          36,172

Book value per share                           $     8.67           $ 8.62          $ 8.15       $     8.30          $ 8.15
Shares outstanding                              4,458,422        4,450,564       4,447,252        4,445,224       4,437,869

PERFORMANCE RATIOS:
Return on average assets                            0.95%            0.80%           0.70%            0.76%           0.76%
Return on average equity                           12.36%           10.37%           8.36%            8.93%           7.89%
Net interest margin                                 3.83%            3.75%           3.82%            3.58%           3.67%
Efficiency ratio (1)                               60.25%           61.69%          63.20%           63.48%          62.07%

OTHER RATIOS:
Allowance for loan losses to total loans            1.04%            1.06%           1.11%            1.12%           1.12%
Equity to assets                                    7.64%            7.18%           7.80%            8.19%           8.69%
Nonperforming loans to total loans                  0.09%            0.09%           0.11%            0.14%           0.17%
Net charge-offs to total loans                      0.00%            0.01%           0.00%            0.00%           0.00%
Risk adjusted capital ratios:
          Leverage ratio                             9.7%             9.9%           10.5%            10.7%           12.3%
          Tier 1                                    13.0%            13.3%           14.7%            16.1%           17.4%
          Total                                     14.0%            14.3%           15.8%            17.1%           18.3%
</TABLE>

 (1) Computed by dividing noninterest expense by the sum of net interest income
on a tax equivalent basis and noninterest income, including securities gains or
losses and gains or losses on the sale of loans. This is a non-GAAP financial
measure, which we believe provides investors with important information
regarding our operational efficiency. Comparison of our efficiency ratio with
those of other companies may not be possible, because other companies may
calculate the efficiency ratio differently.


                                       17
<PAGE>

NET INTEREST INCOME, AVERAGE BALANCES AND YIELDS

         Net interest income is the difference between interest and fees earned
on assets and the interest paid on deposits and borrowings. Net interest income
is one of the major determining factors in the Bank's performance as it is the
principal source of revenue and earnings. Unlike the larger regional or
mega-banks that have significant sources of fee income, community banks, such as
James Monroe Bank, rely on net interest income from traditional banking
activities as the primary revenue source.

         Tables 1 and 2 provide certain information relating to the Company's
average consolidated statements of financial condition and reflects the interest
income on interest earning assets and interest expense of interest bearing
liabilities for the nine months and quarters ended September 30, 2005 and 2004
and the average yields earned and rates paid during those periods. These yields
and costs are derived by dividing income or expense by the average daily balance
of the related asset or liability for the periods presented. The Company did not
have any tax exempt income during any of the periods presented in Tables 1 and
2. Nonaccrual loans have been included in the average balances of loans
receivable.

         Nine Months 2005 vs. Nine Months 2004. For the nine month period ended
September 30, 2005, net interest income increased $4.2 million, or 46%, to $13.1
million from $8.9 million earned during the same period in 2004. This was
primarily a result of the increase in the volume of earning assets, and
partially offset by growth in higher yielding deposit products and borrowed
funds. During the nine months ended September 30, 2005, total average earning
assets increased by $144.6 million, or 46%, from the same period of 2004.
Average loans outstanding grew by $110.9 million, or 56%, during the first nine
months of 2005 compared to the same period in 2004, while at the same time, the
yield on such loans increased by 36 basis points. Average securities increased
$37.8 million, or 38%, during the first nine months of 2005 compared to the same
period in 2004 and the yield on the securities portfolio increased by 23 basis
points. Average Federal funds sold declined by $6.0 million, or 33%, during the
first nine months of 2005 compared to the same period in 2004 and the yield on
these funds increased by 156 basis points.

         During the nine months ended September 30, 2005, total average interest
bearing liabilities grew by $117.5 million, or 53% from the same period of 2004.
Interest bearing deposits increased $111.2 million with money market accounts
growing $64.2 million, or 45% and time deposits growing $43.5 million, or 88%.
Much of the growth in deposits can be attributed to the two new branches opened
in the third quarter of 2004. Borrowings, which includes fed funds purchased,
Federal Home Loan Bank advances and trust preferred capital notes, increased
$6.2 million over the same period of 2004. Interest expense paid on liabilities
for the first nine months of 2005 was $6.5 million compared with $3.2 million
for the same period of 2004.

         The yield on earning assets improved 54 basis points from 5.14% for the
nine month period ending September 30, 2004 to 5.68% during the same period in
2005. The overall yield on loans grew 36 basis points, the securities portfolio
increased 23 basis points, and Federal funds sold grew 156 basis points
reflecting the overall rise in interest rates from the first nine months of 2004
to the same period this year. The cost of funds increased 62 basis points from
1.92% for the nine month period ending September 30, 2004 to 2.54% during the
same period in 2005.

         The resulting effect of the changes in interest rates between the nine
month periods ended September 30, 2005 and 2004, offset by changes in the volume
and mix of earning assets and interest bearing liabilities resulted in a slight
rise in the net interest margin of 2 basis points from 3.78% in 2004 versus
3.80% in 2005. Management believes this relatively stable net interest margin,
during a period of strong organic growth, is indicative of the Company's
interest rate risk management process.


                                       18

<PAGE>

TABLE 1: AVERAGE BALANCE SHEETS, NET INTEREST INCOME, AND YIELDS/RATES


<TABLE>
<CAPTION>
                                                 NINE MONTHS ENDED                   NINE MONTHS ENDED
                                                 SEPTEMBER 30, 2005                  SEPTEMBER 30, 2004
                                        ----------------------------------  -----------------------------------
                                          AVERAGE                YIELD/       AVERAGE                 YIELD/
(Dollars in thousands)                    BALANCE    INTEREST     RATE        BALANCE     INTEREST     RATE
                                        ------------ ---------- ----------  ------------- ---------- ----------
<S>                                        <C>          <C>         <C>         <C>         <C>          <C>
ASSETS
Loans:
  Commercial                               $ 68,905     $3,421      6.64%       $ 51,720    $ 2,342      6.05%
  Commercial real estate                    217,128     10,576      6.51%        132,019      6,208      6.28%
  Consumer                                   22,434      1,068      6.36%         13,833        578      5.58%

                                        ------------ ----------             ------------- ----------
    Total loans                             308,467     15,065      6.53%        197,572      9,128      6.17%

Loans held for sale                           2,533        104      5.49%            619         26      5.61%
Taxable securities                          137,158      4,112      4.01%         99,390      2,813      3.78%
Federal funds sold and cash equivalents      11,904        247      2.77%         17,874        162      1.21%
                                        ------------ ----------             ------------- ----------

    Total earning assets                    460,062     19,528      5.68%        315,455     12,129      5.14%
                                        ------------ ----------             ------------- ----------

Less: allowance for loan losses              (3,316)                              (2,209)
Cash and due from banks                      16,344                               17,077
Premises and equipment, net                   2,419                                1,951
Other assets                                  4,667                                3,211

                                        ------------                        -------------
    TOTAL ASSETS                           $480,176                             $335,485
                                        ============                        =============

LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest bearing deposits:
  Interest bearing demand deposits         $ 16,005      $ 100      0.84%       $ 12,950       $ 62      0.64%
  Money market deposit accounts             207,625      3,487      2.25%        143,447      1,909      1.78%
  Savings accounts                            3,923         40      1.36%          3,441         32      1.24%
  Time deposits                              93,063      2,104      3.02%         49,532        835      2.25%
                                        ------------ ----------             ------------- ----------
    Total interest bearing deposits         320,616      5,731      2.39%        209,370      2,838      1.81%
Borrowings:
  Trust preferred capital notes               9,279        445      6.41%          9,279        327      4.71%
  Other borrowed funds                        9,956        277      3.72%          3,715         36      1.29%
                                        ------------ ----------             ------------- ----------
    Total borrowings                         19,235        722      5.02%         12,994        363      3.73%
                                        ------------ ----------             ------------- ----------

    Total interest bearing liabilities      339,851      6,453      2.54%        222,364      3,201      1.92%
                                        ------------ ----------             ------------- ----------

Net interest income and net yield
  on interest earning assets                          $ 13,075      3.80%                   $ 8,928      3.78%
                                                     ==========                           ==========

Noninterest-bearing demand deposits         100,994                               76,853
Other liabilities                             1,449                                1,090
Stockholders' equity                         37,882                               35,178
                                        ------------                        -------------

    TOTAL LIABILITIES AND
    STOCKHOLDERS' EQUTIY                   $480,176                             $335,485
                                        ============                        =============
</TABLE>


                                       19
<PAGE>


         Third Quarter 2005 vs. Third Quarter 2004. For the quarter ended
September 30, 2005, net interest income increased $1.5 million, or 48%, to $4.7
million from $3.2 million earned during the same period in 2004. This was
primarily a result of growth in earning assets, partially offset by increases in
rates paid on interest bearing liabilities which exceeded the growth in rates
received on interest earning assets. During the quarter ended September 30,
2005, total average earning assets increased by $140.8 million, or 41%, from the
same period of 2004. Average loans outstanding grew by $127.2 million, or 59%,
during the third quarter of 2005 compared to the same quarter in 2004, while at
the same time, the yield on such loans increased by 60 basis points. Average
securities increased $31.2 million, or 32%, during the third quarter of 2005
compared to the same period in 2004 and the yield on the securities portfolio
declined by 11 basis points. Additional securities were purchased from the
liquidity generated throughout the past year and invested in securities at
yields greater than federal funds, but less than yields generated by loans.
Federal funds sold decreased by $20.4 million over the same period last year and
the yield on these funds increased by 194 basis points.

         During the third quarter of 2005, average interest bearing liabilities
increased $110.6 million, or 45% from the same period of 2004. Interest bearing
deposits increased $97.7 million with money market accounts growing by $26.8
million, or 16%, and time deposits increasing by $66.9 million, or 129%. During
the third quarter of 2005, borrowings, which includes Federal funds purchased,
Federal Home Loan Bank advances and trust preferred capital notes, increased
$12.9 million. Interest expense paid on liabilities during the third quarter of
2005 was $2.5 million compared with $1.2 million for the same period of 2004.

         The yield on earning assets increased 79 basis points to 5.88% for the
quarter ending September 30, 2005 from 5.09% during the same period in 2004
reflecting the overall rise in interest rates from the third quarter of 2004 to
the same period this year. The overall yield on loans increased 60 basis points
while the yield on the securities portfolio declined 11 basis points and the
yield on overnight investments increased 194 basis points. The cost of funds
rose 79 basis points to 2.79% for the quarter ending September 30, 2005 from
2.00% during the same period in 2004.

         The resulting effect of the changes in interest rates between the
quarters ended September 30, 2005 and 2004, offset by changes in the volume and
mix of earning assets and interest bearing liabilities resulted in a slight
increase in the net interest margin of 16 basis points from 3.67% in 2004 to
3.83% in 2005. Management believes this stability during a period of strong
organic growth is indicative of the Company's interest rate risk management
process.


                                       20
<PAGE>

TABLE 2: AVERAGE BALANCE SHEETS, NET INTEREST INCOME, AND YIELDS/RATES


<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED                   THREE MONTHS ENDED
                                                 SEPTEMBER 30, 2005                   SEPTEMBER 30, 2004
                                        -----------------------------------  -----------------------------------
                                          AVERAGE                 YIELD/       AVERAGE                 YIELD/
(Dollars in thousands)                    BALANCE     INTEREST     RATE        BALANCE     INTEREST     RATE
                                        ------------  ---------- ----------  ------------- ---------- ----------
<S>                                        <C>          <C>          <C>         <C>           <C>        <C>
ASSETS
Loans:
  Commercial                               $ 72,785     $ 1,255      6.84%       $ 56,959     $  850      5.94%
  Commercial real estate                    245,001       4,102      6.64%        145,003      2,267      6.22%
  Consumer                                   26,045         438      6.67%         14,694        201      5.44%
                                        ------------  ----------             ------------- ----------
    Total loans                             343,831       5,795      6.69%        216,656      3,318      6.09%

Loans held for sale                           3,287          46      5.55%            550          8      5.79%
Taxable securities                          128,081       1,271      3.95%         96,850        988      4.06%
Federal funds sold and cash equivalents      11,690         102      3.33%         32,074        112      1.39%
                                        ------------  ----------             ------------- ----------

    Total earning assets                    486,889       7,214      5.88%        346,130      4,426      5.09%
                                        ------------  ----------             ------------- ----------

Less: allowance for loan losses              (3,580)                               (2,410)
Cash and due from banks                      16,020                                17,748
Premises and equipment, net                   2,387                                 2,548
Other assets                                  4,953                                 3,253
                                        ------------                         -------------
    TOTAL ASSETS                           $506,669                              $367,269
                                        ============                         =============

LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest bearing deposits:
  Interest bearing demand deposits         $ 17,799        $ 36      0.80%       $ 13,169     $   22      0.66%
  Money market deposit accounts             194,811       1,174      2.39%        167,999        792      1.88%
  Savings accounts                            3,582          12      1.33%          4,185         13      1.24%
  Time deposits                             118,910         986      3.29%         52,019        293      2.24%
                                        ------------  ----------             ------------- ----------
    Total interest bearing deposits         335,102       2,208      2.61%        237,372      1,120      1.88%
Borrowings:
  Trust preferred capital notes               9,279         160      6.84%          9,279        117      5.02%
  Other borrowed funds                       12,876         140      4.31%              -          -       n.a.
                                        ------------  ----------             ------------- ----------
    Total borrowings                         22,155         300      5.37%          9,279        117      5.02%
                                        ------------  ----------             ------------- ----------

    Total interest bearing liabilities      357,257       2,508      2.79%        246,651      1,237      2.00%
                                        ------------  ----------             ------------- ----------

Net interest income and net yield
  on interest earning assets                            $ 4,706      3.83%                    $3,189      3.67%
                                                      ==========                           ==========

Noninterest-bearing demand deposits         108,948                                84,064
Other liabilities                             1,615                                 1,002
Stockholders' equity                         38,849                                35,552
                                        ------------                         -------------

    TOTAL LIABILITIES AND
    STOCKHOLDERS' EQUTIY                   $506,669                              $367,269
                                        ============                         =============
</TABLE>


                                       21
<PAGE>


         Table 3 shows the composition of the net change in net interest income
for the periods indicated, as allocated between the change due to changes in the
volume of average earning assets and interest bearing liabilities, and the
changes due to changes in interest rates. As the table shows, the increase in
net interest income of $1.5 million for the quarter ended September 30, 2005, as
compared to the quarter ended September 30, 2004, is due to the growth in the
volume of earning assets and interest bearing liabilities. While the rise in
interest rates has, to date, had an impact on interest income, it has had a
greater impact on interest expense. Management has controlled its exposure to
changes in interest rates such that dramatic declines in rates from 2001 through
2003 and the low but steadily rising interest rate environment since June 2004
has resulted in a modest $50,000 decline of net interest income during the third
quarter of 2005 compared to the same quarter last year, whereas the growth in
earning assets and interest bearing liabilities resulted in an increase of $1.6
million to net interest income. Interest income increased $2.8 million during
the third quarter of 2005 compared to the third quarter of 2004 as higher
yielding loans grew at a faster pace than securities and overnight investments
resulting in a $2.2 million increase in interest income attributable to asset
growth while changes in rates resulted in growth of interest income of $547,000.
Interest expense during these comparable quarters increased $1.3 million with
$673,000 of this rise attributable to growth in interest bearing liabilities
while changes in rates resulted in an increase of interest expense of $598,000.

         The increase in net interest income of $4.1 million for the nine months
ended September 30, 2005, as compared to the nine months ended September 30,
2004, is due to growth in earning assets and interest bearing liabilities offset
slightly by changes in interest rates. While the rise in interest rates has, to
date, had an impact on interest income, it has had a greater impact on interest
expense. Management has controlled its exposure to changes in interest rates
resulting in a modest $287,000 reduction of net interest income, whereas the
growth in earning assets and interest bearing liabilities resulted in an
increase of $4.4 million to net interest income. Interest income increased $7.4
million during the first nine months of 2005 compared to the first nine months
of 2004 as higher yielding loans grew at a faster pace than securities and
overnight investments resulting in a $6.2 million increase in interest income
attributable to growth while changes in rates resulted in growth of interest
income of $1.2 million. Interest expense during the first nine months of 2005
compared to the same period in 2004 grew $3.3 million with $1.8 million of this
rise attributable to growth in interest bearing liabilities while changes in
rates resulted in an increase of interest expense of $1.5 million.


TABLE 3

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED SEPTEMBER 30,         NINE MONTHS ENDED SEPTEMBER 30,
                                                           2005 VS. 2004                           2005 VS. 2004
                                             --------------------------------------    -------------------------------------
                                                                 DUE TO CHANGE                            DUE TO CHANGE
                                              INCREASE            IN AVERAGE            INCREASE           IN AVERAGE
                                                 OR           -------------------          OR          -------------------
(Dollars in thousands)                       (DECREASE)       VOLUME         RATE      (DECREASE)      VOLUME         RATE
                                             ----------       ------         ----      ----------      ------         ----
<S>                                           <C>           <C>             <C>        <C>           <C>             <C>
Earning Assets:
Loans                                         $ 2,477       $ 1,953         $ 524      $ 5,937       $ 5,119         $  818
Loans held for sale                                38            40            (2)          78            80             (2)
Securities                                        283           315           (32)       1,299         1,068            231
Federal funds sold and cash equivalents           (10)          (67)           57           85           (54)           139
                                              -------       -------         -----      -------       -------         ------
  Total interest income                         2,788         2,241           547        7,399         6,213          1,186

INTEREST BEARING LIABILITIES:
Interest bearing demand deposits                   14             8             6           38            15             23
Money market deposit accounts                     382           127           255        1,578           853            725
Savings deposits                                   (1)           (2)            1            8             4              4
Time deposits                                     693           378           315        1,269           733            536
Borrowed funds                                    183           163            20          359           174            185
                                              -------       -------         -----      -------       -------         ------
  Total interest expense                        1,271           674           597        3,252         1,779          1,473
                                              -------       -------         -----      -------       -------         ------
    Net interest income                       $ 1,517       $ 1,567         $ (50)     $ 4,147       $ 4,434         $  287
                                              =======       =======         =====      =======       =======         ======
</TABLE>


                                       22
<PAGE>

PROVISION AND ALLOWANCE FOR LOAN LOSSES

         The provision for loan losses is based upon a methodology that includes
among other factors, a specific evaluation of commercial and commercial real
estate loans that are considered special mention, substandard or doubtful. All
other loans are then categorized in pools of loans with common characteristics.
A potential loss factor is applied to these loans which considers the historical
charge off history of the Company and its peer group, trends in delinquencies
and loan grading, current economic conditions, and factors that include the
composition of the Company's loan portfolio. At September 30, 2005, the Company
had a $163 thousand impaired loan on nonaccrual status, which is performing, and
an additional $180,000 in loans on nonaccrual status or past due 90 days or more
and still accruing. See Note 4 to the unaudited consolidated financial
statements for additional information regarding the Company's asset quality and
allowance for loan losses. While the dollar volume of total nonperforming loans
at September 30, 2005 declined $58,000, or 14%, from $401,000 at September 30,
2004 to $343,000 at September 30, 2005, more importantly, the percentage of
total loans represented by such nonperforming loans has declined significantly
from 0.17% at September 30, 2004 to 0.14% at December 31, 2004 to 0.09% at
September 30, 2005.

         The Company's methodology determining an appropriate allowance for loan
losses was approved by the Audit Committee and the Board of Directors. The
quarterly allowance and provision are approved by the Board. The methodology is
reevaluated on a quarterly basis. Pending the development of a negative trend
with respect to past due loans or charge offs or significant changes in economic
conditions, the Company continues to maintain an allowance it believes is
adequate.

         As reflected in Table 4 below, the allowance is allocated among the
various categories of loans based upon the methodology described herein.


TABLE 4

         The following table shows the allocation of the allowance for loan
losses at the dates indicated. The allocation of portions of the allowance to
specific categories of loans is not intended to be indicative of future losses,
and does not restrict the use of the allowance to absorb losses in any category
of loans. See Note 4 to the unaudited consolidated financial statements included
in this report for additional information regarding the allowance for loan
losses and nonperforming assets.

<TABLE>
<CAPTION>
                                          SEPTEMBER 30, 2005           DECEMBER 31, 2004         SEPTEMBER 30, 2004
                                      ---------------------------  -------------------------- --------------------------
                                                       PERCENT                    PERCENT                     PERCENT
                                                      OF TOTAL                    OF TOTAL                   OF TOTAL
(Dollars in thousands)                  AMOUNT          LOANS        AMOUNT        LOANS        AMOUNT         LOANS
                                        ------          -----        ------        -----        ------         -----
<S>                                       <C>              <C>         <C>             <C>        <C>             <C>
Construction loans                        $   304          11.6%       $   299         14.1%      $    78         13.1%
Commercial loans                              830          11.0%           553         13.1%        1,237         14.1%
Commercial real estate loans                2,474          71.9%         1,868         67.0%        1,205         67.1%
Real estate 1-4 family residential             20           0.4%            20          0.6%           14          0.7%
Home equity loans                              21           2.3%            17          2.2%           18          2.3%
Consumer loans                                117           2.8%            33          3.0%           25          2.7%
                                      ------------   ------------  ------------ ------------- ------------  ------------
  Balance end of the period               $ 3,766           100%       $ 2,790          100%      $ 2,577          100%
                                      ============   ============  ============ ============= ============  ============
</TABLE>


LOANS

         The loan portfolio is the largest component of earning assets and
accounts for the greatest portion of total interest income. At September 30,
2005, total loans were $362 million, a 57.3% increase from the $230.1 million in
loans outstanding at September 30, 2004. Total loans at September 30, 2005
represented a 44.8% increase from the $250.0 million of loans at December 31,
2004. In general, loans are internally generated with the exception of a small
percentage of participation loans purchased from other local community banks.
Lending activity is largely confined to our market of Northern Virginia. We do
not engage in highly leveraged transactions or foreign lending activities.

         Loans in the commercial category, as well as commercial real estate
mortgages, consist primarily of short term (five year or less final maturity)
and/or floating or adjustable rate commercial loans made to small to medium
sized companies. We do not have any agricultural loans in the portfolio. There
are no substantial loan concentrations to any one industry or to any one
borrower.


                                       23
<PAGE>

         Virtually all of the Company's commercial real estate mortgage and
development loans, which account for approximately 72% of our total loans at
September 30, 2005, relate to property in the Northern Virginia market. As such,
they are subject to risks relating to the general economic conditions in that
market, and the market for real estate in particular. The local real estate
market remains generally strong, and the Company attempts to mitigate risk
though careful underwriting, including primary reliance on the borrower's
financial capacity and ability to repay without resort to the property, and
lends primarily with respect to properties occupied or managed by the owner.

         The Company's 1-4 family residential real estate loans are generally
not the typical purchase money first mortgage loan or refinancing, but are loans
made for other purposes and the collateral obtained is a first deed of trust on
the residential property of the borrower. The underlying loan would have a final
maturity much shorter than the typical first mortgage and may be a variable or
fixed rate loan. As reflected in Table 5, 23% of the Company's loans are fixed
rate loans and 95% of the Company's loans reprice or have a maturity date that
falls within five years.

         Consumer loans consist primarily of secured installment credits to
individuals. The consumer portfolio, which includes consumer loans, home equity
loans, and 1-4 family residential loans, represents 5.5% of the loan portfolio
at September 30, 2005, as compared to 5.7% at September 30, 2004 and 5.8% at
December 31, 2004.

TABLE 5


         Table 5 shows the maturities of the loan portfolio and the sensitivity
of loans to interest rate fluctuations at September 30, 2005. Maturities are
based on the earlier of contractual maturity or repricing date. Demand loans,
loans with no contractual maturity and overdrafts are represented in one year or
less.

<TABLE>
<CAPTION>
                                                            SEPTEMBER 30, 2005
                                           ----------------------------------------------------
                                                         AFTER ONE
                                            WITHIN      YEAR THROUGH    AFTER FIVE
(Dollars in thousands)                     ONE YEAR      FIVE YEARS        YEARS         TOTAL
<S>                                        <C>            <C>           <C>           <C>
Construction loans                         $  36,028      $   1,955     $  4,237      $  42,220
Commercial loans                              30,241          9,380          171         39,792
Commercial real estate loans                 130,165        118,641       11,711        260,517
Real estate 1-4 family residential               518            553          287          1,358
Home equity loans                              8,190              -            -          8,190
Consumer loans                                 7,842          1,822            -          9,664
Deposit overdrafts                               308              -            -            308
                                           ---------      ---------     --------      ---------
Total loans                                $ 213,292      $ 132,351     $ 16,406      $ 362,049
                                           =========      =========     ========      =========

<CAPTION>
                                                         AFTER ONE
                                            WITHIN      YEAR THROUGH    AFTER FIVE
(Dollars in thousands)                     ONE YEAR      FIVE YEARS        YEARS         TOTAL
<S>                                        <C>            <C>           <C>           <C>
Fixed rate                                 $  31,326      $  44,031     $  9,255      $  84,612
Variable/Adjustable rate                     181,966         88,320        7,151        277,437
                                           ---------      ---------     --------      ---------
Total loans                                $ 213,292      $ 132,351     $ 16,406      $ 362,049
                                           =========      =========     ========      =========
</TABLE>


                                       24
<PAGE>

INVESTMENT SECURITIES

         The Company currently, and for all periods shown, classifies its entire
securities portfolio as available for sale. Increases in the portfolio have
occurred whenever deposit growth has outpaced loan demand and the forecast for
loan growth is such that the investment of excess liquidity in investment
securities (as opposed to short term investments such as federal funds) is
warranted. In general, our investment philosophy is to acquire high quality
government agency securities or high grade corporate bonds, with a maturity of
five to six years or less in the case of fixed rate securities. In the case of
mortgage backed securities, the policy is to invest only in those securities
whose average expected life is projected to be approximately five to six years
or less. Mortgage backed securities with a maturity of ten years or more are
either adjustable rate securities or the expected life of the mortgage pool is
generally no more than five or six years. To the extent possible, we attempt to
"ladder" the one time call dates for all our securities. The Company's
investment policy is driven by its interest rate risk process and the need to
minimize the effect of changing interest rates to the entire balance sheet.
         The following table provides information regarding the composition of
our investment portfolio at the dates indicated.

TABLE 6

<TABLE>
<CAPTION>
                                                     AT SEPTEMBER 30, 2005          AT SEPTEMBER 30, 2004
                                                   ----------------------------------------------------------
                                                                    PERCENT OF                    PERCENT OF
(Dollars in thousands)                                BALANCE       PORTFOLIO        BALANCE      PORTFOLIO
                                                   -------------  ------------    -------------  ------------
<S>                                                   <C>              <C>           <C>              <C>
Available for sale (fair value):
     U.S. Agency                                      $  95,737         80.2%        $  97,571         82.7%
     Mortgage-backed securities                          18,210         15.2%           15,472         13.1%
     Adjustable rate mortgage-backed securities           1,094          0.9%            1,785          1.5%
     Corporate bonds                                      1,659          1.4%            2,177          1.8%
     Restricted stock                                     2,716          2.3%            1,048          0.9%
                                                   -------------  ------------    -------------  ------------
Total                                                 $ 119,416        100.0%        $ 118,053        100.0%
                                                   =============  ============    =============  ============
</TABLE>


TABLE 7

         The following table provides information regarding the maturity
composition of our investment portfolio, at fair value, at September 30, 2005.

                             MATURITY OF SECURITIES
                                Years to Maturity

<TABLE>
<CAPTION>
                                         Within            Over 1 Year        Over 5 Years          Over
(Dollars in thousands)                   1 Year          through 5 Years    through 10 Years      10 Years            Total
                                    ----------------     ---------------    ----------------   --------------     --------------
                                     Amount    Yield     Amount   Yield     Amount   Yield     Amount   Yield     Amount   Yield
                                    --------   -----     ------   -----     ------   -----     ------   -----     ------   -----
<S>                                  <C>        <C>       <C>        <C>    <C>       <C>      <C>       <C>     <C>        <C>
AVAILABLE FOR SALE (FAIR VALUE):
U. S. Agency                         $67,452    3.78%     $28,285    3.74%  $  -        -      $   -       -     $ 95,737   3.77%
Mortgage-backed securities                44    5.92%         427    4.15%   2,070    4.30%     15,669   4.80%     18,210   4.73%
Adjustable rate mortgage-
  backed securities                        -       -            -       -      -        -        1,094   3.89%      1,094   3.89%
Corporate bonds                            -       -        1,659    5.21%     -        -          -       -        1,659   5.21%
Restricted stock                           -       -            -              -        -        2,716   3.33%      2,716   3.33%
                                     -------              -------           -------            -------           --------

Total                                $67,496    3.78%     $30,371    3.83%  $ 2,070   4.30%    $19,479   4.54%   $119,416   3.93%
                                     =======              =======           =======            =======           ========
</TABLE>


                                       25
<PAGE>

LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT

         The primary objectives of asset and liability management are to provide
for the safety of depositor and investor funds, assure adequate liquidity, and
maintain an appropriate balance between interest sensitive earning assets and
interest bearing liabilities. Liquidity management involves the ability to meet
the cash flow requirements of customers, who may be depositors wanting to
withdraw funds or borrowers needing assurance that sufficient funds will be
available to meet their credit needs.

         We define liquidity for these purposes as the ability to raise cash
quickly at a reasonable cost without principal loss. The primary liquidity
measurement we utilize is called the Basic Surplus, which captures the adequacy
of our access to reliable sources of cash relative to the stability of our
funding mix of deposits. Accordingly, we have established borrowing facilities
with other banks (Federal funds) and the Federal Home Loan Bank as sources of
liquidity in addition to the deposits.

         Financial institutions utilize a number of methods to evaluate interest
rate risk. Methods range from the original static gap analysis (the difference
between interest sensitive assets and interest sensitive liabilities repricing
during the same period, measured at a specific point in time), to running
multiple simulations of potential interest rate scenarios, to rate shock
analysis, to highly complicated duration analysis.

         One tool that we utilize in managing our interest rate risk is the
matched funding matrix. The matrix arrays repricing opportunities along a time
line for both assets and liabilities. The longer term, more fixed rate sources
are presented in the upper left hand corner while the shorter term, more
variable rate items, are at the lower left. Similarly, uses of funds, such as
assets, are arranged across the top moving from left to right.

         The body of the matrix is derived by allocating the longest fixed rate
funding sources to the longest fixed rate assets and shorter term variable
sources to shorter term variable uses. The result is a graphical depiction of
the time periods over which we expect to experience exposure to rising or
falling rates. Since the scales of the liability and assets sides are identical,
all numbers in the matrix would fall within the diagonal lines if we were
perfectly matched across all repricing time frames. Numbers outside the diagonal
lines represent two general types of mismatches: liability sensitive in time
frames when numbers are to the left of the diagonal line and asset sensitive in
time frames when numbers are to the right of the diagonal line.

         At September 30, 2005, we were modestly liability sensitive in the
short term and then we become asset sensitive beyond three years. This is
primarily caused by the assumptions used in allocating a repricing term to
nonmaturity deposits--demand deposits, savings accounts, and money market
deposit accounts. The actual impact due to changes in interest rates is
difficult to quantify in that the administrative ability to change rates on
these products is influenced by competitive market conditions in changing rate
environments, prepayments of loans, customer demands, and many other factors.
These products may not reprice consistently with assets such as variable rate
commercial loans or other loans that immediately reprice as the prime rate
changes. While the traditional gap analysis and the matched funding matrix show
a general picture of our potential sensitivity to changes in interest rates, it
cannot quantify the actual impact of interest rate changes.

         Thus, the Company manages its exposure to possible changes in interest
rates by simulation modeling or "what if" scenarios to quantify the potential
financial implications of changes in interest rates. In practice, each quarter
approximately 14 different "what if" scenarios are evaluated which include the
following scenarios: Static Rates, Most Likely Rate Projection, Rising Rate
Environment, Declining Rate Environment, Ramp Up 100bp and 200bp over 12-months,
and Ramp Down 100bp and 200bp over 12-months scenarios. In addition, 8 rate
shock scenarios are modeled at 50bp up and 50bp down increments but not below
zero. At September 30, 2005, the following 12-month impact on net interest
income is estimated to range from a positive impact of 4.6% in a rising rate
scenario, to a negative impact of (2.9)% if rates decline 200 basis points from
current levels. In the rate shock scenarios the 12-month impact on net interest
income is estimated to range from a positive impact of 1.7% if rates were to
immediately increase 200 basis points, to a negative impact of (3.7)% if rates
were to immediately decline 200 basis points. The Company believes these ranges
of exposure to changes in interest rates to be well within acceptable range
given a wide variety of potential rate change scenarios. This process is
performed each quarter to ensure the Company is not materially at risk to
possible changes in interest rates.


                                       26
<PAGE>

         The following are the projected potential percentage impact on the
Company's net interest income over the next 12 months for the scenarios the
Company believes are most likely to occur, but measured against a static
interest rate environment as of September 30, 2005. The Company is positioned to
improve earnings if rates continue to rise. With respect to further reductions
in rates, the Company would experience further negative implications on margins
and earnings; however, the Company does not believe that a 100 basis point
decline is realistic given that interest rates remain at low levels, and in
light of the Federal Reserve's indications with respect to the interest rate
environment. Thus management believes the exposure to further changes in
interest rates would not have a material negative effect on the results of
operations.

               Rising Rate Scenario                            4.6 %
               Ramp Up 200bp- 12 months                        2.6 %
               Ramp Up 100bp- 12 months                        1.4 %
               Most Likely Rates                               1.2 %
               Static Rates                                    -0- %
               Ramp Down 100bp- 12 months                     (1.3)%
               Ramp Down 200bp- 12 months                     (2.9)%
               Low Rate Environment                           (1.1)%


NONINTEREST INCOME AND EXPENSE

         Noninterest income consists primarily of service charges on deposit
accounts, gains on sales of loans and fees and other charges for banking
services. Noninterest expense consists primarily of salary and benefit costs and
occupancy and equipment expense. To date, the company has not been required to
pay any premiums for deposit insurance. To the extent that deposit premiums may
become required, the Company's results of operations will be adversely affected.

         The following table shows the detail of noninterest income for the
three and nine month periods ended September 30, 2005 and 2004.

TABLE 8

         The categories of noninterest income that exceed 1% of operating
revenue are as follows:

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                          SEPTEMBER 30,                        SEPTEMBER 30,
                                                 -------------------------------      -------------------------------
(Dollars in thousands)                                2005            2004                 2005            2004
                                                 ---------------  --------------      ---------------  --------------
<S>                                                       <C>             <C>                <C>               <C>
Service charges on deposit accounts                       $  90           $  72              $   247           $ 254
Cash management fees                                         27              27                   79              75
Other fee income                                            117              55                  269             190
Gain on sale of loans                                       280              77                  636             248
Gain on sale of securities                                   (5)              -                   13              54
                                                 ---------------  --------------      ---------------  --------------
Total noninterest income                                  $ 509           $ 231              $ 1,244           $ 821
                                                 ===============  ==============      ===============  ==============
</TABLE>


         The increase in noninterest income during the three and nine month
periods ended September 30, 2005 compared to the same period last year is due in
large part to an increase in the gain on sale of loans as the addition of
mortgage lending officers and stepped-up marketing efforts have lead to a growth
in loan originations.


                                       27
<PAGE>

TABLE 9

         The categories of noninterest expense that exceed 1% of operating
revenue are as follows:

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                     SEPTEMBER 30,                       SEPTEMBER 30,
                                           -------------------------------      -------------------------------
(Dollars in thousands)                         2005             2004                2005             2004
                                           --------------   --------------      --------------   --------------
<S>                                              <C>              <C>                 <C>              <C>
Salaries and benefits                            $ 1,963          $ 1,083             $ 5,339          $ 3,241
Occupancy cost, net                                  305              265                 901              593
Equipment expense                                    166              138                 491              304
Professional fees                                     86               38                 254              101
Data processing costs                                126              192                 360              523
Courier and express services                           7               32                  24              108
Advertising and public relations                      57               66                 211              171
State franchise tax                                  103               66                 289              197
Director fees                                         62               41                 178              127
Compliance expense                                    53               26                 145               26
Other                                                214              128                 632              322
                                           --------------   --------------      --------------   --------------
Other noninterest expense                        $ 3,142          $ 2,075             $ 8,824          $ 5,713
                                           ==============   ==============      ==============   ==============
</TABLE>


         Noninterest expense increased $3.1 million from $5.7 million to $8.8
million for the first nine months of 2005, as compared to the same period in
2004. Approximately 67% of this increase is in salary and benefit costs. During
2005 the Company added personnel and administrative staff to support the growth
in customers and transactions being processed. Occupancy costs and equipment
costs increased 51% and 61% respectively over the first nine months of 2005 as
two new branches were opened in the third quarter of 2004 and the mortgage
company occupied a new facility starting in the third quarter of 2005. The
increase in state franchise tax is due to the increased capital of the Bank from
earnings retention and capital infusions in 2004 and 2005. Noninterest expense
increased $1.1 million from $2.0 million to $3.1 million for the third quarter
of 2005, as compared to the same period in 2004. Compliance expense is now
captured as a separate category and includes expenses related to compliance with
regulatory initiatives such as the Bank Secrecy Act, Sarbanes-Oxley 404, and the
Graham-Leach-Bliley Act.

DEPOSITS AND OTHER BORROWINGS

         The principal sources of funds for the Bank are core deposits (demand
deposits, NOW accounts, money market accounts, savings accounts and certificates
of deposit less than $100,000) from the local market areas surrounding the
Bank's offices. The Bank's deposit base includes transaction accounts, time and
savings accounts and accounts which customers use for cash management and which
provide the Bank with a source of fee income and cross marketing opportunities
as well as a low cost source of funds. Time and savings accounts, including
money market deposit accounts, also provide a relatively stable and low cost
source of funding.


                                       28
<PAGE>

TABLE 10

         The following table reflects deposits by category for the periods
indicated.

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED SEPTEMBER 30,
                                                     --------------------------------------------------
                                                               2005                        2004
                                                     -----------------------     ----------------------
                                                      AVERAGE       AVERAGE       AVERAGE      AVERAGE
(Dollars in thousands)                                BALANCE        RATE         BALANCE       RATE
                                                     ---------    ----------    ----------    --------
<S>                                                  <C>             <C>         <C>            <C>
Deposits:
    Noninterest-bearing demand                       $ 108,948          - %      $  84,064         - %
    Interest-bearing demand                             17,799       0.80           13,169      0.66
    Money market                                       194,811       2.39          167,999      1.88
    Savings                                              3,582       1.33            4,185      1.24
    Certificates of deposit of $100,000 or more        103,304       3.34           38,665      2.22
    Other time                                          15,606       2.95           13,354      2.30
                                                     ---------     --------      ---------    --------
Total interest bearing deposits                        335,102       2.61 %        237,372      1.88 %
                                                     ---------                   ---------
Total deposits                                       $ 444,050                   $ 321,436
                                                     =========                   =========
</TABLE>


TABLE 11

         The following table indicates the amount of certificates of deposit of
less than $100,000 and $100,000 or more, and their remaining maturities as of
September 30, 2005.

<TABLE>
<CAPTION>
                                            3 MONTHS       4 TO 6         7 TO 9       10 TO 12       OVER 12
(Dollars in thousands)                      OR LESS        MONTHS         MONTHS        MONTH         MONTHS          TOTAL
                                           ----------     --------       --------     ----------     ---------       -------
<S>                                         <C>          <C>             <C>           <C>           <C>           <C>
Certificates of deposit less than
$100,000                                    $ 4,109      $  2,389        $ 3,107       $ 2,973       $ 3,109       $  15,687
Certificates of deposit of
$100,000 or more                             23,793        28,960         18,446        11,107        22,488         104,794
                                          -----------  ------------   ------------   -----------   -----------   -------------
Total certificates of deposit               $27,902      $ 31,349       $ 21,553       $14,080       $25,597       $ 120,481
                                          ===========  ============   ============   ===========   ===========   =============
</TABLE>


CAPITAL MANAGEMENT

         Management monitors historical and projected earnings, asset growth, as
well as its liquidity and various balance sheet risks in order to determine
appropriate capital levels. At September 30, 2005, stockholders' equity
increased $2.5 million to $38.7 million from the $36.2 million in equity at
September 30, 2004. The rise in equity was a result of the $3.8 million increase
in retained earnings over the past twelve months offset by the $1.6 million
decrease in other comprehensive income resulting from an increase in unrealized
losses on securities. In addition, $285,000 was contributed to capital from the
exercise of options and sale of shares in the Company's KSOP plan.

         Capital Requirement. A comparison of the Company's and the Bank's
regulatory capital at September 30, 2005, compared to minimum regulatory capital
guidelines is shown in the table that follows.


                                       29
<PAGE>


TABLE 12

<TABLE>
<CAPTION>
                                                                MINIMUM            MINIMUM TO BE
                                             ACTUAL           GUIDELINES         "WELL CAPITALIZED"
                                        -----------------  ------------------  -----------------------
<S>                                          <C>                 <C>                   <C>
Total Risk-Based Capital
     Company                                 14.0%               8.0%                   N/A
     Bank                                    12.7%               8.0%                  10.0%

Tier 1 Risk-Based Capital
     Company                                 13.0%               4.0%                   N/A
     Bank                                    11.7%               4.0%                   6.0%

Tier 1 Leverage Ratio
     Company                                  9.7%               4.0%                   N/A
     Bank                                     8.8%               4.0%                   5.0%
</TABLE>


OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

         For information about off balance sheet arrangements and contractual
obligations of the Company, refer to item 7 of the Company's Form 10-K for the
year ended December 31, 2004. There have been no material changes in off balance
sheet arrangements and contractual obligations of the Company since December 31,
2004, except that in October 2005, the Company issued an additional $8 million
aggregate liquidation amount of trust preferred securities..

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Please refer to Item 2 of this report, "Management's Discussion and
Analysis of Financial Condition and Results of Operations", under the caption
"Liquidity and Interest Rate Sensitivity Management."

ITEM 4.  CONTROLS AND PROCEDURES

         The Company's management, under the supervision and with the
participation of the Chief Executive Officer, Chief Operating Officer, and Chief
Financial Officer, evaluated, as of the last day of the period covered by this
report, the effectiveness of the design and operation of the Company's
disclosure controls and procedures, as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934. Based on that evaluation, the Chief Executive
Officer, Chief Operating Officer, and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective. There were no
changes in the Company's internal control over financial reporting (as defined
in Rule 13a-15 under the Securities Act of 1934) during the quarter ended
September 30, 2005 that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.


                                       30
<PAGE>

                           PART II. Other Information

Item 1.  Legal Proceedings
         None

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds.

         (a) Sales of Unregistered Securities.                None

         (b) Use of Proceeds.                                 Not Applicable.

         (c) Purchases of Securities.                         None

Item 3.  Defaults Upon Senior Securities                      None

Item 4.  Submission of Matters to a Vote of Security Holders  None

Item 5.  Other Information
         (a) Required Form 8-K Disclosures                    None

         (b) Changes in Procedures for Director Nominations
             by Security Holders.                             None

Item 6.  Exhibits

Number            Description
------            -----------
3(a)      Articles of Incorporation of James Monroe Bancorp (1)
3(b)      Bylaws of James Monroe Bancorp (2)
4(a)      Indenture, dated as of March 26, 2002 between James Monroe Bancorp,
          Inc. and State Street Bank and Trust Company of Connecticut, National
          Association, as trustee (3)
4(b)      Amended and Restated Declaration of Trust, dated as of March 26, 2002
          among James Monroe Bancorp, Inc., State Street Bank and Trust Company
          of Connecticut, National Association, as Institutional Trustee, and
          John R. Maxwell, David W. Pijor and Richard I. Linhart as
          Administrators (3)
4(c)      Guarantee Agreement dated as of March 26, 2002, between James Monroe
          Bancorp, Inc. and State Street Bank and Trust Company of Connecticut,
          National Association, as trustee (3)
4(d)      Indenture, dated as of July 31, 2003 between James Monroe Bancorp,
          Inc. and U.S. Bank, National Association, as trustee (3)
4(e)      Amended and Restated Declaration of Trust, dated as of July 31, 2003
          among James Monroe Bancorp, Inc., U.S. Bank, National Association, as
          Institutional Trustee, and John R. Maxwell, David W. Pijor and Richard
          I. Linhart as Administrators (3)
4(f)      Guarantee Agreement dated as of July 31, 2003, between James Monroe
          Bancorp, Inc. and U.S. Bank, National Association, as trustee (3)
4(g)      Indenture, dated as of October 3, 2005 between James Monroe Bancorp,
          Inc. and U.S. Bank National Association, as trustee (3)
4(h)      Amended and Restated Declaration of Trust, dated as of October 3, 2005
          among James Monroe Bancorp, Inc., U.S. Bank National Association, as
          trustee, and John R. Maxwell and John J. Brough as Administrators (3)
4(i)      Guarantee Agreement dated as of October 3, 2005, between James Monroe
          Bancorp, Inc. and U.S. Bank National Association, as trustee (3)
10(a)     Employment contract between James Monroe Bancorp and John R.
          Maxwell(4)
10(b)     Employment contract between James Monroe Bancorp and Richard I.
          Linhart (5)
10(c)     James Monroe Bancorp 1998 Management Incentive Stock Option Plan (6)
10(d)     James Monroe Bancorp 2000 Director's Stock Option Plan (7)
10(e)     James Monroe Bancorp, Inc. 2003 Equity Compensation Plan (8)
11        Statement re: Computation of Per Share Earnings Please refer to Note 2
          to the financial statements included in this report.
21        Subsidiaries of the Registrant
31(a)     Certification of Chief Executive Officer


                                       31
<PAGE>

31(b)     Certification of Chief Operating Officer
31(c)     Certification of Chief Financial Officer
32(a)     Certification of Chief Executive Officer
32(b)     Certification of Chief Operating Officer
32(c)     Certification of Chief Financial Officer
--------------------------
(1)  Incorporated by reference to exhibit 3(a) to the Company's Quarterly Report
     on Form 10-QSB for the quarter ended June 30, 2004.
(2)  Incorporated by reference to exhibit 3(b) to the Company's registration
     statement on Form SB-2 (No. 333-38098).
(3)  Not filed in accordance with the provisions of Item 601(b)(4)(iii) of
     Regulation SK. The Company agrees to provide a copy of these documents to
     the Commission upon request.
(4)  Incorporated by reference to exhibit of same number to the Company's Annual
     Report on Form 10-KSB for the year ended December 31, 2002.
(5)  Incorporated by reference to exhibit of same number to the Company's Annual
     Report on Form 10-KSB for the year ended December 31, 2003.
(6)  Incorporated by reference to exhibit 10(b) to the Company's registration
     statement on Form SB-2 (No. 333-38098).
(7)  Incorporated by reference to exhibit 10(c) to the Company's registration
     statement on Form SB-2 (No. 333-38098).
(8)  Incorporated by reference to exhibit 10(e) to the Company's Quarterly
     Report on Form 10-QSB for the quarter ended June 30, 2003.


                                       32
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:  November 11, 2005      BY: /s/John R. Maxwell
                                  ---------------------------------------
                                  John R. Maxwell, President &
                                  Chief Executive Officer


Date:  November 11, 2005      BY: /s/ Richard I. Linhart
                                  -----------------------------------
                                  Richard I. Linhart, Executive Vice President &
                                  Chief Operating  Officer





Date:  November 11, 2005      BY: /s/ John J. Brough
                                  -------------------------------
                                  John J. Brough, Senior Vice President &
                                  Chief Financial Officer


                                       33